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Established Contributor
lithium78
Posts: 928
Registered: ‎07-30-2011

No grace period on Discover? That's news to me.

I was trying to figure out why Discover charged me interest this month when everything was paid off in full and the CSR informed me that Discover doesn't have a grace period, so if you don't immediately pay off your card when you make purchases, they charge daily residuals.  Hmm.  I learn something new every day.


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Senior Contributor
john398
Posts: 3,239
Registered: ‎01-19-2009

Re: No grace period on Discover? That's news to me.

Hmmm are you sure? did you have a balance the previous month?

Frequent Contributor
SwampSystems
Posts: 358
Registered: ‎06-25-2012

Re: No grace period on Discover? That's news to me.

Paying Interest:  We begin to impose interest charges on a transaction, fee or interest charge from the day we add it to the daily balance. We continue to impose interest charges until you pay the total amount you owe us. You can avoid paying interest on Purchases as described below. However, you cannot avoid paying interest on Balance Transfers or Cash Advances.

 

How to Avoid Paying Interest on Purchases ("Grace Period") 
If you paid the New Balance on your previous billing statement by the Payment Due Date shown on that billing statement, we will not impose interest charges on new Purchases, or any portion of a new Purchase, paid by the Payment Due Date on your current billing statement. New Purchases are Purchases that first appear on the current billing statement.

 

How We Apply Payments May Impact Your Grace Period 
If you do not pay your New Balance in full each month, then, depending on the balance to which we apply your payment, you may not get a grace period on new Purchases.

 

How We Calculate Interest Charges - Daily Balance Method (including current transactions):  We calculate interest charges each billing period by first figuring the "daily balance" for each Transaction Category. Transaction Categories include standard Purchases, standard Cash Advances and different promotional balances, such as Balance Transfers.

 

 

How We Figure the Daily Balance for Each Transaction Category

  • We start with the beginning balance for each day. The beginning balance for the first day of the billing period is your balance on the last day of your previous billing period.
  • We add any interest charges accrued on the previous day's daily balance and any new transactions and fees. We add any new transactions or fees as of the later of the Transaction Date or the first day of the billing period in which the transaction or fee posted to your Account.
  • We subtract any new credits and payments.
  • We make other adjustments (including those adjustments required in the "Paying Interest" section).

 

 

How We Figure Your Total Interest Charges

  • We multiply the daily balance for each Transaction Category by its daily periodic rate. We do this for each day in the billing period. This gives us the interest charges for each Transaction Category. To get a daily periodic rate, we divide the APR that applies to the Transaction Category by 365.
  • We add up all the daily interest charges. The sum is the total interest charge for the billing period.

 

 

How We Include Fees 
We add Balance Transfer Fees to the applicable Balance Transfer Transaction Category. We add Cash Advance Fees to the applicable Cash Advance Transaction Category. We add all other fees to the standard Purchase Transaction Category.

 

Balance Subject to Interest Rate. Your statement shows a Balance Subject to Interest Rate. It shows this for each transaction category. The Balance Subject to Interest Rate is the average of the daily balances during the billing period.

Established Contributor
lithium78
Posts: 928
Registered: ‎07-30-2011

Re: No grace period on Discover? That's news to me.

Two months ago, I was hit with a $2.00 minimum interest charge, because I made a mistake and made a Cinnabon purchase on the statement date.  D'oh!  This past month I paid everything off before the statement date except for the amount that I balance transferred at 0% from another card and they charged me interest on a weird amount that had nothing to do with the balance transfer amount.  I called them to figure out what was going on and that's when they told me that there is no grace period and that the interest came from an amount that I left on the card for a couple of weeks instead of paying immediately.


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Frequent Contributor
SwampSystems
Posts: 358
Registered: ‎06-25-2012

Re: No grace period on Discover? That's news to me.

On Discover, if you're not entirely paying your balance in full, you get charged interest. Even if you're carrying a 0% balance transfer month-to-month and paying your new purchases in full, there is no grace period for those new purchases and you get charged interest.

Established Contributor
lithium78
Posts: 928
Registered: ‎07-30-2011

Re: No grace period on Discover? That's news to me.


SwampSystems wrote:

Paying Interest:  We begin to impose interest charges on a transaction, fee or interest charge from the day we add it to the daily balance. We continue to impose interest charges until you pay the total amount you owe us. You can avoid paying interest on Purchases as described below. However, you cannot avoid paying interest on Balance Transfers or Cash Advances.

 

How to Avoid Paying Interest on Purchases ("Grace Period") 
If you paid the New Balance on your previous billing statement by the Payment Due Date shown on that billing statement, we will not impose interest charges on new Purchases, or any portion of a new Purchase, paid by the Payment Due Date on your current billing statement. New Purchases are Purchases that first appear on the current billing statement.

 

How We Apply Payments May Impact Your Grace Period 
If you do not pay your New Balance in full each month, then, depending on the balance to which we apply your payment, you may not get a grace period on new Purchases.

 

How We Calculate Interest Charges - Daily Balance Method (including current transactions):  We calculate interest charges each billing period by first figuring the "daily balance" for each Transaction Category. Transaction Categories include standard Purchases, standard Cash Advances and different promotional balances, such as Balance Transfers.

 

 

How We Figure the Daily Balance for Each Transaction Category

  • We start with the beginning balance for each day. The beginning balance for the first day of the billing period is your balance on the last day of your previous billing period.
  • We add any interest charges accrued on the previous day's daily balance and any new transactions and fees. We add any new transactions or fees as of the later of the Transaction Date or the first day of the billing period in which the transaction or fee posted to your Account.
  • We subtract any new credits and payments.
  • We make other adjustments (including those adjustments required in the "Paying Interest" section).

 

 

How We Figure Your Total Interest Charges

  • We multiply the daily balance for each Transaction Category by its daily periodic rate. We do this for each day in the billing period. This gives us the interest charges for each Transaction Category. To get a daily periodic rate, we divide the APR that applies to the Transaction Category by 365.
  • We add up all the daily interest charges. The sum is the total interest charge for the billing period.

 

 

How We Include Fees 
We add Balance Transfer Fees to the applicable Balance Transfer Transaction Category. We add Cash Advance Fees to the applicable Cash Advance Transaction Category. We add all other fees to the standard Purchase Transaction Category.

 

Balance Subject to Interest Rate. Your statement shows a Balance Subject to Interest Rate. It shows this for each transaction category. The Balance Subject to Interest Rate is the average of the daily balances during the billing period.


So, basically, I no longer have a grace period because I have a balance transfer amount, since that leaves an amount unpaid for a "New Balance".  Am I reading that right?


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Frequent Contributor
SwampSystems
Posts: 358
Registered: ‎06-25-2012

Re: No grace period on Discover? That's news to me.

That's exactly right.

Established Contributor
lithium78
Posts: 928
Registered: ‎07-30-2011

Re: No grace period on Discover? That's news to me.

Wow.  I guess I'll just pay off the entire amount then.  What a ridiculous balance transfer policy.


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Valued Contributor
trumpet-205
Posts: 1,945
Registered: ‎11-11-2010

Re: No grace period on Discover? That's news to me.

[ Edited ]

You simply need to pay more. This is how all credit card works.

 

* Minimum payment amount applies to balance with lowest APR. In your case it is BT.

* Any amount over minimum payment applies to balance with highest APR. In your case it is purchases.

 

So you need to pay purchase amount + minimum payment + $10 (torward daily interest accured by purchase).

 


lithium78 wrote:

Wow.  I guess I'll just pay off the entire amount then.  What a ridiculous balance transfer policy.


You should consider yourselve lucky, as pre-2009 (before CARD Act), all payment is applied to balance with lowest APR. Meaning if you use your CC to do BT, you cannot use it on purchase, or you will get charged on interest for sure.

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Established Contributor
lithium78
Posts: 928
Registered: ‎07-30-2011

Re: No grace period on Discover? That's news to me.


trumpet-205 wrote:

 

You should consider yourselve lucky, as pre-2009 (before CARD Act), all payment is applied to balance with lowest APR. Meaning if you use your CC to do BT, you cannot use it on purchase, or you will get charged on interest for sure.


I'm used to BoA, which allows you to make a balance transfer and doesn't play the games that Discover apparently plays.  Discover has agreed to refund the interest they charged and I'll pay off the BT and consider it an expensive lesson not to do that kind of business with Discover.

 

As far as I'm concerned, a credit card gets paid a BT fee and that is all they should be receive as compensation for that service.  Discover has just made me less likely to do heavy business with them, because they want to trick me into paying them extra.  I don't pay interest on credit cards; They pay me for generating swipe fees for them.  


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